Filed under: Bad news, Consumer experience, Competitive strategy, Starbucks (SBUX), McDonald’s (MCD)

What will Starbucks (NASDAQ: SBUX) do now? McDonald’s (NYSE: MCD) plans to add 14,000 coffee bars [subscription required] to its U.S. stores. It thinks this will add $1 billion in sales each year. According to The Wall Street Journal, “locations will install coffee bars with ‘baristas’ serving cappuccinos, lattes, mochas and the Frappe, similar to Starbucks’ ice-blended Frappuccino.”

Investors will fairly ask whether Starbucks can do anything to stop the erosion of its customer base as coffee drinkers move to other outlets like Dunkin Donuts and McDonald’s. Starbucks’s shares have lost nearly half of their value over the past 52 weeks and now trade at just a little over $18.

The coffee chain has tried adding its own breakfast food, but most of its stores open at 6 AM while many McDonald’s locations are open 24 hours and have a much broader selection of food along with a larger number of locations.

Starbucks at $15? It is starting to look that way.

Douglas A. McIntyre is an editor at 247wallst.com.

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This entry was posted on Monday, January 7th, 2008 at 3:15 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.